The Informants’ Rewards
Program Needs More Centralized Management Oversight

June 2006

Reference Number:2006-30-092

This
report has cleared the Treasury Inspector General for Tax Administration
disclosure review process and information determined to be restricted from
public release has been redacted from this document.

This report presents the results of our review of the
Internal Revenue Service’s (IRS) Informants’ Rewards Program.The overall objective of this review,
initiated at the request of the Senate Finance Committee, was to determine whether
the IRS uses its Informants’ Rewards Program as a viable tool to identify,
investigate, and address potential tax law violations with equitable rewards
for cooperating informants.

Synopsis

The IRS uses its Informants’ Rewards Program to administer
the authority provided by Internal Revenue Code Section 7623 (2004) to make
payments to private citizens for assistance in “(1) detecting underpayments of
tax, and (2) detecting and bringing to trial and punishment persons guilty of
violating the internal revenue laws.”Rewards
are paid as a percentage of the taxes, fines,
and penalties collected based on the relationship of the informant’s information
to the recovery. Rewards can also be
paid on amounts collected prior to receipt of the information if the
information leads to the denial of a claim for refund that otherwise would have
been paid.This Program has been an
effective method of identifying and collecting unpaid taxes.From Fiscal Years (FY) 2001 through 2005, over
$340 million in taxes, fines, penalties, and interest were recovered based on
information obtained through the Informants’ Rewards Program, with rewards of
over $27 million paid to informants.

The Informants’ Rewards Program has significantly
contributed to the IRS’ efforts to enforce tax laws, but additional management
focus could enhance the effectiveness of the Program as an enforcement tool and
make the process more accommodating to informants.Our analysis of IRS data indicated that
examinations initiated based on informant information were often more effective
and efficient than returns initiated using the
IRS’ primary method for selecting returns for examination.[1]

However, we found that a lack of standardized procedures and
limited managerial oversight resulted in control weaknesses over the Program.We reviewed a judgmental sample of 22 paid
claims for reward and 69 rejected claims for reward processed at 3 of the 5 Informants’
Claims Examiner (ICE) units[2]
in operation during FY 2005.We noted
that each ICE unit maintained its own records because a nationwide database of
informant claims does not exist. For the
paid informant claims in our sample, we found that 45 percent of the case files
reviewed had problems with basic control issues (missing copies of key forms,
no record of letters to informants, etc.), and we were unable to determine the
justification for the reward percentage awarded to the informant in 32 percent
of the cases.For the rejected informant
claims in our sample, we were unable to determine the rationale for the
reviewer’s decision to reject the claim in 76 percent of the cases reviewed.

We also found that an average of over 7 ½ years passed
between the filing of the initial claim by the informant and the payment of the
reward.We observed lapses in the
monitoring of taxpayers’ accounts for payment activity, which may have
contributed to delays.For the rejected
claims in our sample, an average of over 6 ½ months elapsed between the date of
the claim and the letter to the informant rejecting the claim. We observed instances of lengthy delays in the
processing of rejected claims, such as unexplained delays between the receipt
of the claim and the initial or subsequent review of the claim by ICE unit
personnel.

The lack of centralized and active management oversight of
the Program increases the risk of errors such as improper payment of rewards or
incorrect rejection of valid claims. Additional
management focus could also assist in reducing the processing time for paid
claims, which would make the Program more attractive to future informants
wishing to report violations of tax laws.

Recommendations

We recommended the Deputy Commissioner for Services and Enforcement
centralize management of the Informants’ Rewards Program to increase oversight of
the Program and standardize the processing of informant claims.We also recommended the Deputy Commissioner
for Services and Enforcement ensure a detailed nationwide database of informant
claims is developed and implemented to provide increased visibility of the
processing and disposition of informant claims.

Response

IRS management agreed with our recommendations.Management’s response stated that the IRS had
conducted its own review of the Informants’ Rewards Program in 2005 and was
taking a number of steps to improve the management and oversight of the Program.These steps include designating an
Informants’ Rewards Program coordinator for each operating division,
establishing a National Oversight Committee for the Informants’ Rewards
Program, consolidating informant claims processing at the Ogden Campus, and
implementing a nationwide web-based system to track, monitor, and control
informant claims.Management’s complete response
to the draft report is included as Appendix VII.

Copies of
this report are also being sent to IRS officials affected by the report
recommendations.Please contact me at
(202) 622-6510 if you have questions or Curtis W. Hagan, Assistant
Inspector General for Audit (Small Business and
Corporate Programs), at (202) 622-3837.

Section (§) 7623 of the Internal Revenue Code[3]
authorizes payment of rewards for “(1) detecting underpayments of tax, and (2)
detecting and bringing to trial and punishment persons guilty of violating the
internal revenue laws.”The Internal
Revenue Service (IRS) administers this authority through its Informants’
Rewards Program.This Program is
unrelated to the rewards[4]
paid to private citizens who bring suit for violations of the Federal False
Claims Act[5]
because the violations of the Internal Revenue Code were specifically excluded
from the scope of the False Claims Act.[6]

The
Informants’ Rewards Program provides rewards for concerned citizens who supply
information to the IRS that leads to the detection and punishment of tax law
violations.

The IRS receives information
about potential tax violations in the mail, over the telephone, or from visits
to IRS walk-in offices.Generally, an
IRS employee receiving an allegation of a potential tax violation will record
the information on an Information Report Referral (Form 3949).IRS procedures instruct employees not
to solicit or encourage an informant to provide information in exchange for a
reward.However, if the informant indicates that he or she
wants a reward, the IRS employee will provide Rewards for Information Given to the Internal Revenue Service (Publication
733) and an Application for Reward for Original Information (Form 211)[7] to the informant.

Instructions on the
back of Form 211 direct informants to submit the completed Form to the IRS campus[8] servicing their State.[9]Upon
reaching the campus, the form is routed to the Informants’ Claims Examiner
(ICE) staff at the campus, which performs an initial evaluation of the reward
claim.If the Form 211 does not
contain information that warrants further action, the reward claim should be rejected and the ICE staff will
issue a rejection letter[10]
to the informant.If the reward claim is not immediately
rejected, the claim will be acknowledged,[11]a case file established, and a control number assigned to
the reward claim.The ICE staff also performs
research on the alleged tax
violator’s account to determine whether
there is open examination or collection activity.If an open case exists, the examiner should
send a copy of the reward claim and any information to the officeconducting the ongoing activity. If the informant alleges unreported income of
$50,000 or more per year, the information should be routed to the Criminal
Investigation function Area Office for the area where the alleged tax violator
resides.

For those informant
reward claims with open examination or collection activity, the examination or collection
employee assigned to the case will complete a Confidential Evaluation Report on
Claim for Reward (Form 11369) to assess the significance of the information
provided by the informant and whether the informant is entitled to a reward.If the field employee determines that a
reward should be allowed, the reward percentage is determined by whether the
information directly led to the recovery (15 percent); indirectly led to the
recovery (10 percent); or caused the investigation but had no direct
relationship to the determination of tax liability (1 percent).The dollar amount of the reward is computed
by multiplying the reward percentage by the amount of taxes, fines, and
penalties (but not interest) collected.Different
reward percentages can be used if the case involves multiple taxpayers and/or
tax years.The reward amount must total at
least $100 to be paid and cannot exceed $2 million in total.The limits on the reward percentage and
dollar amount can be waived by the use of a special agreement between the
informant and the IRS, which must be approved by the IRS Commissioner or his or
her delegate.

During hearings for the IRS Restructuring and Reform Act of
1998,[12]
some members of Congress called for a provision to eliminate the Informants’
Rewards Program, believing it resulted in unwarranted examinations of honest
taxpayers.Although this provision was
not included in the final legislation, the IRS does not openly promote the Program.The public web site (IRS.gov) does not
contain a webpage explaining the Program, nor does the webpage for reporting
tax fraud mention the availability of rewards.However, information such as Form 211 and Publication 733 can be located
by a search of the web site.

This review was performed at the Small
Business/Self-Employed (SB/SE) Division National Headquarters in New
Carrollton, Maryland, in the Campus Compliance Services organization and at the
ICE staffs in the Brookhaven, Ogden, and Philadelphia Campuses, during the
period September 2005 through March 2006.The audit was conducted in accordance with Government Auditing Standards.
Detailed information on our audit
objective, scope, and methodology is presented in Appendix I.Major contributors to the report are listed
in Appendix II.

The Commissioner of the IRS annually provides information to
Congress on the amounts collected based on informant information and the
rewards paid to informants.Figure 1
shows the results reported to Congress for the past 5 years.

From FYs 2001 through 2005, a total of $27,289,741 in rewards
was paid to informants for the recovery of $249,509,179 in taxes, fines, and
penalties, for an average reward of 10.9 percent.Interest of $90,820,248 was also recovered on
the taxes, fines, and penalties recovered, although rewards are not paid on
interest recovered.Therefore, a total
of $340,329,427 was recovered due to informant information for FYs 2001
through 2005. Because IRS procedures generally
require that rewards be paid only in cases in which the informant’s information
led to the examination of an issue,[13]
it is reasonable to assume that the amounts recovered due to informants’
information would not have been otherwise recovered by the IRS.

IRS Restructuring and Reform Act of 1998 § 3804 required the
Secretary of the Treasury to produce a report on the use of Internal Revenue Code
§ 7623 and the results of its use.[14]The report, prepared by the IRS, was delivered
in September 1999[15]
and determined that the cost/benefit ratio of the Program compared favorably
with other IRS enforcement programs.The
report estimated the IRS incurred slightly over 4 cents in cost (including
personnel and administrative costs) for each dollar collected from the
Informants’ Rewards Program (including interest), compared to a cost of over 10
cents per dollar collected for all enforcement programs.

The IRS report also found that examinations initiated based
on informant information had a higher dollar yield per hour[16]
and a lower no-change[17]
rate, when compared to returns selected using the IRS’ primary method of
selecting returns, the Discriminant Index Function (DIF).[18]The results from the final 3 years of the
review are summarized in Figure 2.

Examinations initiated based on informant information
continue to be more productive than those initiated based on DIF scores.The examination results from the 3 most
recent years for the SB/SE Division, which conducts the vast majority of
examinations based on informant information, are shown in Figure 3.

Source:Treasury Inspector General for Tax
Administration analysis of IRS data.

Because examinations based on informants’ information
involve taxpayers or issues that may not have been otherwise selected by the
IRS and are often more productive than examinations initiated using the IRS’
usual methods, the Informants’ Rewards Program continues to contribute to
enforcement of the tax laws.

The primary guidance for the Informants’ Rewards Program is
found in Internal Revenue Manual Section 25.2.This document contains general guidance for the administration of the Program
and the computation of rewards but does not include any provision for centralized
management oversight or review of the activities of the ICE units.As a result, each ICE unit has traditionally operated
as a semi-autonomous entity, attached to various other teams in the Compliance
Services organization at each campus.We
visited three of the five ICE units in operation in FY 2005 (Brookhaven,
Ogden, and Philadelphia) and found that two of the units were attached to
classification teams, while the other was attached to a Tax Equity Fiscal
Responsibility Act team.Each ICE unit
had different procedures for the processing of claims, but only one unit had
written documentation of these procedures.

No nationwide database currently exists to allow management
to track and monitor claims on a nationwide basis, although SB/SE Division officials
informed us that a system will be implemented in the near future.Yearly reporting of consolidated results to
Congress is done by a coordinator at SB/SE Division Headquarters based on
written input from each ICE unit.Each of
the three ICE units we visited tracked its claim inventory differently:one unit primarily used a manual system and
updated an online database periodically; the other two ICE units used different
online databases, supplemented by standalone computer spreadsheets.

The overall management of the Informants’ Rewards Program
currently resides within the Campus Compliance Services function within the SB/SE
Division.A coordinator at the SB/SE Division
Headquarters is responsible for collecting and reporting certain information annually
to Congress but does not exert any managerial control over the operation of the
ICE units. No other personnel within
this function devote significant time to the management of the Informants’
Rewards Program.In our discussions with
ICE unit and SB/SE Division Headquarters personnel, we were informed that there
was no ongoing program to monitor the performance of ICE units, such as
operational reviews or management assistance visits.

The lack of standardized procedures and the limited
managerial oversight were evident in the results of our reviews of paid and
rejected claims at the three ICE units included in our review.We reviewed a judgmental sample of 22 paid
claims for reward and 69 rejected claims for reward processed at the 3 ICE
units during FY 2005.For the informant
claims paid in FY 2005, we found that almost one-half (45 percent) of the case
files reviewed had a problem with basic control issues (missing copies of key
forms, no record of letters to informants, etc.).For the informant claims rejected in
FY 2005, approximately 14 percent of the case files had similar issues,
including 4 files that an ICE unit could not locate, despite the fact that the
claims were listed on its database.

In addition to reviewing the basic recordkeeping at the ICE
units, we reviewed the files of the rejected cases to determine if the
informants’ information received appropriate initial and subsequent reviews.We evaluated whether basic evaluation steps
were taken after the claims were received, such as a review of the alleged tax violator’s
account on the Integrated Data Retrieval System[19]
to determine if there was open examination or collection activity against the
taxpayer(s) named in the informant’s allegation, and found no evidence of these
steps in the files for 59 percent of the rejected claims reviewed.We also reviewed the rejected claims to
determine if subsequent steps were taken, for example referring the information
to the appropriate entities, such as the Criminal Investigation function for
evaluation and/or a field examination function for determination of tax
potential.We did not find evidence of
such referrals in 80 percent of the case files reviewed.

Finally, we reviewed both the paid and rejected claims to
determine if the reviewer’s decision on the ultimate action taken on the claim was
justified, based on information in the case file.For a paid claim, the most important decision
is on the reward percentage granted to the informant; in 32 percent of the
paid claims, we were unable to determine the justification for the percentage granted.In most of these cases, the reviewers simply entered
the percentage on the Form 11369
and did not provide any explanation for the decision.

For a rejected claim, the reason for rejection is of major
significance.In 76 percent of the rejected
informant claims included in our review, we were unable to determine the
rationale for the reviewer’s decision to reject the claim, based on information
in the case file.In most of these cases,
the reviewers simply noted their decisions in the case files and provided
little or no description of the rationale for the decisions.

As part of our review of rejected informant claims, we
selected 30 rejected claims that alleged tax law violations by taxpayers serviced
by the Large and Mid-Size Business (LMSB) Division, to determine if these
claims received greater scrutiny due to the higher profile of the taxpayers and
presumably larger dollar amounts involved.We reviewed these informant claims for the same attributes as the other
rejected claims, which were primarily directed at individual and small business
taxpayers.We found the results were
largely comparable for all attributes other than the control of claims, as
shown in Figure 4.

Figure 4:Comparison
of Results for Review of Rejected Claims Pertaining to LMSB Division Taxpayers
to Results for Review of All Other Rejected Claims

Rewards are offered both to encourage informants to provide
information and, in some cases, to compensate informants for risking their
personal and business relationships by providing the information.If the claims are not timely processed, the
rewards may lose some of their motivating value.Our review of the sample of 22 paid claims
found that an average of over 7 ½ years passed between the filing of the initial
claim by the informant and the payment of the reward.Much of this delay was attributable to the
fact that the law requires that rewards be paid only once the additional taxes,
fines, and penalties have been collected from taxpayers.[25]However, we also observed lapses in the monitoring
of the taxpayer’s account for payment activity for periods in excess of a
year.The length of time required to
receive payment for claims may cause informants to be less willing to come
forward, especially those that risk losing their jobs by informing on their
employers.

We also observed that the processing of rejected claims took
a significant length of time, with an average of over 6 ½ months between the
date of the claim and the letter to the informant rejecting the claim.We also observed instances of lengthy delays
in the processing of rejected claims, such as unexplained delays between the
receipt of the claim and the initial or subsequent review of the claim by ICE
unit personnel.

In summary, although the Informants’ Rewards Program has
significantly contributed to the detection and punishment of tax law violations,
additional management focus could enhance the effectiveness of the Program.Additional management focus could assist in
reducing the processing time for claims, which would make the Program more attractive
to future informants.While our review
of a sample of paid and rejected informant claims did not disclose any obvious
errors of a significant magnitude (i.e., improper payment of rewards or
incorrect rejection of valid claims), the lack of centralized and active
management oversight of the Program increases the risk of these errors and
decreases the effectiveness of the Program as a useful enforcement tool.

Recommendations

Recommendation 1:The Deputy Commissioner for Services and
Enforcement should centralize management of the Informants’ Rewards Program to increase
oversight of the Program and standardize the processing of informant claims.

Management’s
Response:IRS management agreed with this recommendation and stated that the
Informants’ Rewards Program is being consolidated at the Ogden Campus.All Forms 211 received at any campus after
April 26, 2006, are to be routed to the Ogden Campus for control and processing.

Recommendation 2:The Deputy Commissioner for Services and
Enforcement should ensure a detailed nationwide database of informant claims is
developed and implemented to provide increased visibility of the processing and
disposition of informant claims.

Management’s
Response:IRS management agreed with this recommendation and stated they are
developing a web-based Informants’ Claims application that will be accessible
from the Ogden Campus and IRS Headquarters.This will facilitate response to informant claims.The application is to be operational by
December 31, 2006.

The overall objective of this review was to determine whether
the Internal Revenue Service (IRS) uses its Informants’ Rewards Program as a
viable tool to identify, investigate, and address potential tax law violations
with equitable rewards for cooperating informants.To accomplish our objective, we:

I.Interviewed managers and responsible officials at Small
Business/Self-Employed Division Headquarters to obtain an overview of the
Informants’ Rewards Program; Program statistics; and the coordination that
takes place among the Informants’ Rewards Program, IRSLeadDevelopmentCenter,
and Criminal Investigation Division Confidential Informant Program.

II.Reviewed Internal Revenue Code Section (§) 7623,[26]
the Internal Revenue Manual, and other documents to obtain an understanding of
the parameters and procedures for the Informants’ Rewards Program.

III.Analyzed statistical data from the IRS Informants’
Rewards Program for the past 5 fiscal years to determine information such as
the numbers and amounts of rewards paid.

IV.Obtained statistical performance data and other
information about informant programs at the Department of Defense and the
Department of Health and Human Services and discussed these programs with
knowledgeable officials at the agencies.

V.Discussed the IRS Informants’ Rewards Program with
knowledgeable parties outside the IRS, such as informants and attorneys
familiar with the Program, to determine whether there are opportunities to
increase reporting of tax violations and whether the amount of the awards
provides enough incentive for well-compensated professionals to become
informants.

VI.Selected a judgmental sample[27]
of 22 informant rewards paid in Fiscal Year (FY) 2005 at the 3 Informants’ Claims Examiner (ICE)
units visited.We reviewed the case
files to determine whether proper procedures were followed in processing the
claims, whether the criteria used to decide upon the reward percentage were
reasonable, and the amount of time from the filing of the claims to issuance of
the rewards.

VII.Reviewed examination data for the cases selected in Step
VI. to determine whether the reward percentage given to the informant complied
with the criteria outlined in Part 25 of the Internal Revenue Manual and
applicable sections of the Internal Revenue Code and Regulations.

A.Interviewed
the manager of each ICE unit to determine the actual procedures used to process
informants’ claims for rewards.

B.Selected
a judgmental sample[28]
of 69 informant claims rejected in FY 2005 at the 3 ICE units.We determined the information provided by the
informant; the reason for rejection; the amount of time for the decision; the
extent of communication, if any, with the informant; and whether the case was
referred to the Criminal Investigation Division. We also evaluated whether the rejection was
made in accordance with IRS procedures.

IX.Validated the Revenue Agent examination data used in
the review to the Table 37 for the appropriate IRS business unit.We did not establish the reliability of these
data because extensive data validation tests were outside the scope of this
audit and would have required a significant amount of time.

The text of the following form letter (Letter 1010 (SC)) is
generally used to notify an informant of the rejection of his or her claim.

(name of service center)

(service center address)

Person to Contact:

Contact Telephone
Number:

Claim Number:

(informant’s name)

(informant’s address)

Dear:

We have considered your Form 211,
Application for Reward for Original Information.We are sorry, but the information you
furnished did not meet our criteria for a reward.We assure you that your information was
carefully reviewed and evaluated before we made our decision.

Federal disclosure and privacy laws
prohibit us from telling you the specific reason for rejecting your claim.However, we can tell you that the most common
reasons for not allowing a reward are:

1. Your information did not cause an
investigation or result in the recovery of taxes, penalties, or fines.

2. The Internal Revenue Service
(IRS) already had the information you provided.

3. The taxes recovered were too
small to warrant a reward. (Our policy states that we do not pay rewards less
than $100.)

Your claim will be reconsidered only
if you have new information, not previously reviewed by the IRS, that has
enough investigative potential to warrant further action.If you have information that meets this
description, please send it to this office, to the attention of the above
contact person, and ask us to reconsider your claim.

There are no other administrative
appeals available to you.If we deny
your request for reconsideration, you must bring suit in the U.S. Court of
Federal Claims if you wish to pursue the matter further.

Although your information did not
qualify for a reward, we thank you for participating in the Informants’ Claims
for Reward program.

The text of the following form letter (Letter 1891 (SC)) is
generally used to notify an informant of the receipt of his or her claim for
reward.

(name of service center)

(service center address)

Person to Contact:

Contact Telephone
Number:

Claim Number:

(Informant’s name)

(Informant’s address)

Dear:

We received your claim (Form 211) in
connection with the information you furnished about a tax matter and have
assigned the above claim number.We will
evaluate the information you provided as soon as possible to determine if an
investigation is warranted and a reward is appropriate.Please retain this notice for future
reference.

It is important to understand that
if we initiate an investigation as a result of your information, it could take
several years until final resolution of all tax matters.This is especially true if the taxpayer
exercises all administrative and judicial appeal rights.In addition, before the Internal Revenue
Service (IRS) can pay a reward, we must collect any additional taxes,
penalties, or fines recovered by reason of your information.Collection action could also take several
years.

At the conclusion of our review and
evaluation, we will only be able to tell you whether or not the information you
provided met the criteria for a reward.Federal disclosure and privacy laws prohibit us from informing you of
specific actions we take or do not take with respect to your information.We hope you understand this restriction
placed on the IRS, by law, and ask for your patience in this matter.

We will notify you as soon as we
complete all actions relating to your claim and determine whether your
information qualifies you for a reward.If you change your address, please send us a completed Form 8822, Change
of Address.You can get this form by
calling 1‑800–TAX–FORM.If you
request a status of your claim, please include the claim number with your
request.Send it to this office, to the
attention of the above contact person.Please keep in mind that we may only tell you whether or not your claim
is still active.

Thank you for participating in the
Informants’ Claims for Reward program.

The
response was removed due to its size.To
see the response, please go to the Adobe PDF version of the report on the TIGTA
Public Web Page.

[1] The IRS
uses the Discriminant Index Function, which is a mathematical technique used to
classify income tax returns for examination potential by assigning weights to
certain basic return characteristics.

[2] We
visited the ICE units at the IRS
Campuses in Brookhaven, New
York; Ogden, Utah;
and Philadelphia, Pennsylvania.The other ICE units were located at the IRS Campuses
in Cincinnati, Ohio,
and Memphis, Tennessee.

[4] Under 31
United States
Code (U.S.C.) § 3730 (1994), a private plaintiff may be entitled to between 15 percent
and 30 percent of the proceeds of a successful action or settlement for a
violation of the False Claims Act.

[9] At the
time of our review, the IRS had Informants’
Claims Examiner (ICE) staffs at the IRS Campuses in Brookhaven, New York; Cincinnati, Ohio; Memphis, Tennessee; Ogden, Utah; and Philadelphia, Pennsylvania.

[10]
Internal Revenue Manual Exhibit 25.2.2-7 shows Letter 1010 (SC) can be used for
this purpose.See Appendix V for the
text of this Letter.

[11]
Internal Revenue Manual Exhibit 25.2.2-4 shows Letter 1891 (SC) can be used for
this purpose. See Appendix VI for the
text of this Letter.

[16] Dollar
yield per hour refers to the total recommended adjustments to tax liability
divided by the number of examiner hours charged to examinations.

[17] For the
purpose of this analysis, an examination of a return results in a “no-change”
when the examination is closed in the Audit Information Management System using
Disposal Code 02 (no adjustments or changes to tax liability).

[18] The DIF
is a mathematical technique used to classify income tax returns for examination
potential by assigning weights to certain basic return characteristics.

[19] The Integrated
Data Retrieval System is an automated data base composed of information from
several sources that provides IRS employees instantaneous access to certain
taxpayer accounts for research, data entry, and other purposes.

[20] Five
rejected claims were not evaluated for this attribute because the ICE unit
could not locate the files.

[21] One
rejected claim was not evaluated for this attribute because the informant did
not adequately document his or her claim.

[22]
Thirteen rejected claims were not evaluated for this attribute because the
informant did not adequately document his or her claim.

[23] One
rejected claim was not evaluated for this attribute because the informant did
not adequately document his or her claim.

[24]
Thirteen rejected claims were not evaluated for this attribute because the
informant did not adequately document his or her claim.

[25] An informant
can receive an early payment of a reward on the amounts collected by the IRS by
agreeing to waive his or her right to a reward on the amounts collected after
the payment of the early reward.

[27] A
judgmental sample was used for this step due to the lack of a nationwide informant
claims database, which prevented us from obtaining an accurate and complete
sampling universe.The IRS reported that
169 claims were paid in full during Fiscal Year 2005, with an unknown number of
additional partial payments.At each of
the 3Informants’ Claims Examiner (ICE)
units visited, we selected the 2 cases with the largest payments for each
reward level (15 percent, 10 percent, and 1 percent), plus any special
agreement cases with payments larger than those made under the normal reward
levels.

[28]A judgmental sample was used due to the lack
of a nationwide informant claims database, which prevented us from obtaining an
accurate and complete sampling universe.The IRS reported a total of 3,193 claims rejected during FY 2005.At each ICE unit visited, we randomly
selected a sample of 10 rejected claims from a judgmental pool of claims
rejected in FY 2005.Additional sampling
of rejected claims was required at one ICE unit.We also randomly selected a sample of 30
rejected claims from a judgmental pool of claims rejected in FY 2005 relating
to taxpayers serviced by the Large and Mid-Size Business Division.